2QFY15 Results Update | Sector: ICICI...

30 October 2014

2QFY15 Results Update | Sector: Financials

ICICI Bank

Alpesh Mehta ([email protected]); +91 22 3982 5415

Vallabh Kulkarni ([email protected]); +91 22 3982 5430

BSE SENSEX S&P CNX CMP: INR1,611 TP: INR1,900 Buy 27,346 8,169

Bloomberg ICICIBC IN

Equity Shares (m) 1,157.4

M.Cap. (INR b) / (USD b) 1,865.1/30.3

52-Week Range (INR) 1,620/944

1, 6, 12 Rel. Per (%) 10/7/17

Financials & Valuation (INR Billion)

Y/E Mar 2015E 2016E 2017E

NII 190.0 220.8 271.4 OP 190.4 222.4 273.8 NP 113.2 134.3 166.1 NIM (%) 3.3 3.4 3.5 EPS (INR) 98 116 144 EPS Gr (%) 15.4 18.7 23.6 BV/Sh (INR)* 579 664 769 ABV/Sh (INR)* 551.9 634.7 738.0 RoE (%) 15.3 15.7 16.8 RoA (%) 1.8 1.9 1.9

* BV adjusted for investment in

subsidiaries, Prices adj. for sub value

ICICI Bank’s (ICICIBC) 2QFY15 NII/PPP/PAT growth of 15/21/16% YoY were largely in line with estimates. Stable NIM QoQ (3.4%), decline in net stress additions QoQ (INR9.9b v/s INR15.5b in 1QFY15), healthy traction in CA deposits (+15% QoQ and 19% YoY) and retail disbursements (+25% YoY) were the key positives.

Gross slippages and fresh restructuring were INR16.7b (v/s INR11.9b in 1QFY15) and INR8.3b (v/s INR13.9b) respectively. Repayment/slippages net reduction resulted in INR2.5b decline in restructured loans. Net stress loans contained at 3.6% of customer assets. Pipeline for restructuring stood at INR18b.

Loan book grew 14% YoY (+4% QoQ) led by strong traction in SME (+7% QoQ) and Housing (+7% QoQ) loans.

Other highlights: (1) on a higher base, Fees grew 5% YoY, though QoQ growth was healthy at 9%, (2) average CASA ratio was stable QoQ at 39.5%, (3) provisions were 21% above expectation at INR8.5b (0.96% credit cost), (4) consolidated PAT grew 14% YoY to INR30.7b and consolidated RoE stood at 15%.

Valuation and view: Healthy core operations driven by gradual NIM improvement and strong control over opex are leading to strong core RoA of 1.6%+, despite a moderate fee income. Improvement in macro-economic environment and resolution of infrastructure bottlenecks shall lead to reduction in NSL (currently at 3.6%). ICICIBC is well positioned to leverage the opportunities with high core RoA, strong distribution network and capitalization (Tier I of 12.6%). We maintain estimates and expect earnings CAGR of 18%+ over FY14-17E v/s 16% balance sheet CAGR. Buy.

Investors are advised to refer through disclosures made at the end of the Research Report.

30 October 2014 2

ICICI Bank

Exhibit 1: Quarterly performance v/s our estimates and reasons for deviation (INR m) Y/E March 2QFY15A 2QFY15E Var. (%) Comments

Net Interest Income 46,666 45,869 2 Loan growth marginally better than expectation % Change (YoY) 15 13

Other Income 27,384 28,054 -2 Healhty fees; Non-core marginally lower than exp

Net Income 74,050 73,923 0 Operating Expenses 26,971 28,433 -5 Strong control over cost Operating Profit 47,079 45,490 3 Core PPP better than expectation % Change (YoY) 21 17

Other Provisions 8,495 7,045 21

Profit before Tax 38,584 38,445 0 Tax Provisions 11,394 11,533 -1 Net Profit 27,190 26,911 1

Higher prov compensated by higher core income % Change (YoY) 16 14

Source: MOSL, Company

NIM stable QoQ; healthy traction in CA deposits NIM for the quarter came in at 3.4% (stable QoQ), in-line with expectation.

Domestic NIM improved 4bp QoQ to 3.84%, whereas international NIM declined 5bp QoQ to 1.58% mainly on account of overseas bond issue expenses.

CA deposit growth was healthy at 15% QoQ and 19% YoY. SA deposits grew 13% YoY and 3% QoQ. Average daily CASA ratio remains healthy at ~40%. Incremental domestic CASA ratio stood at ~54% in 2QFY15.

Net stress additions decline QoQ; credit costs increased to ~90bp Slippages for the quarter were at INR16.7b (slippage ratio of 2.1% v/s 1.6% in

1QFY15). Recoveries and upgrades were healthy at INR4.4b v/s INR3.6b in 1QFY15 and bank wrote-off/sold INR5.4b in 2QFY15.

GNPA/NNPA in absolute terms increased ~6% QoQ. PCR declined marginally QoQ to 65.9% (v/s 68.4% in 1QFY15). In percentage terms GNPA and NNPA stood at 3.1% and 1.1% respectively.

ICICIBC restructured loan of INR8.3b (0.2% of customer assets) in 2QFY15, however slippages/repayments resulted in net reduction of INR2.5b in outstanding restructured loan book. Outstanding standard restructured loan portfolio (post provisions) declined marginally to INR110b (2.65% of customer assets; down 2% QoQ).

Net stress addition (net slippages + change in restructured loan) amounted to INR9.9b as compared to INR15.5b in 1QFY15.

Pipeline for restructuring stood at INR18b. Management mentioned that stress addition has peaked. FY15 stress addition is expected to be lower than FY14 and credit cost is expected to be ~90bp (including un-hedged forex exposure).

Muted fee income growth; Cost to core income ratio improves On a higher base fee income growth was muted at 5% YoY. However, healthy

retail growth and some traction in transaction banking led to healthy growth of 9% QoQ.

During the quarter bank recognized gain of INR1.65b (v/s INR1.03b in 1QFY15) on account of repatriation from overseas operations which assisted overall non-interest income growth of 26% YoY (down 4% QoQ). Trading gains came in at INR1.4b v/s expectation of INR3.2b.

Domestic NIM improved 4bp QoQ to 3.84%

Net stress additions declined to INR9.9b (v/s

15.5b in 1QFY15)

Non-core income was at INR6.4b much lower than

expectation of INR8b due to lower trading profits

30 October 2014 3

ICICI Bank

Controlled employee expenses as well as other operating expenses (5% below expectation) and healthy NII growth (15% YoY) led to improvement in cost to core income ratio to 37% v/s 41% in 1QFY15.

Healthy retail performance; Corporate growth remains subdued Domestic loans grew 15% YoY (+4% QoQ) whereas, International loans grew

10% YoY (+5% QoQ). International loan as a proportion of overall loan was stable QoQ at 26%. Overall loan growth was healthy at 14% YoY (+4% QoQ).

In domestic portfolio, incremental loan growth was driven by retail segment (+5% QoQ and +25% YoY). Ex-CV segment retail loans grew 31% YoY. Domestic corporate loan portfolio grew just 3% QoQ and 5% YoY.

Within retail loans home loans (7% QoQ and 26% YoY) and auto loans (3% QoQ and 38% YoY) were the key driver. CV loans declined 5% QoQ and 18% YoY. On a lower base personal loans reported strong growth of 14% QoQ and 121% YoY.

Performance of subsidiaries; Consolidated RoE ~15% ICICI UK’s total assets increased 2% QoQ (flat YoY) to USD4.2b and PAT came in

at USD5.1m v/s USD6.3m in 1QFY15. CAR stood at 23.1%. ICICI Canada’s total assets were at CAD5.5b (down 2% QoQ and +4% YoY). PAT

declined to CAD9.2m v/s CAD14.4m in 1QFY15. CAR was at 34.0%. ICICI Life Insurance reported PAT of INR4.0b (+4 QoQ and +3% YoY). APE for

2QFY15 increased to INR12.0b (v/s INR6.6b in 1QFY15 and INR9.5b in 2QFY14) and NBAP margin stood at 10.9% v/s 14% in 2QFY14. AUM witnessed strong growth of 23% YoY to INR907b.

2QFY15 general Insurance reported profit of INR1.6b (v/s INR1.6b in 2QFY14 and INR 720m in 1QFY15).

Consolidate PAT for 2QFY15 grew 14% YoY to INR30.7b and consolidated RoE increased to 15.1% as compared to 14.6% in 2QFY14.

Conference Call highlights Guidance a) NIMs 3.3-3.4% b) Credit cost 90-95bp c) fees largely driven by market

conditions d) cost to income ratio at 38-40% e) Gross stress addition to be lower than FY14 (excluding NPA falling from RL) f) CASA ratio at 38-40% and g) sustain ROA at FY14 levels

Capital: Considering the growth and available capital ICICIBC believes there is no need of capital raising for next 3 years

Loan growth Cautious on corporate loans; Targeting 2-3% higher than industry growth and

will be largely driven by Retail (20%+); International loan growth will be based on the market conditions

Some pick up in CV and CE seen in last two months. Reported growth muted due to run down of the bought out portfolio. Asset quality holding up quite well in CV segment.

Asset quality Impact of coal block de-allocation difficult to quantify currently. Based on the

internal analysis ICICIBC believes projects will still be able to service debt.

Retail loans formed ~65% of the incremental domestic

loans in the quarter

Ex-CV segment retail loans grew 31% YoY.

For 2QFY15 ICICI Life insurance reported PAT of

INR4.0b (+3% YoY)

Consolidated RoE stood at 15.1% as compared to

14.6% in 1QFY15.

30 October 2014 4

ICICI Bank

During the quarter, ICICIBC sold INR2.91b worth of accounts to ARCs Restructured loans: a) Gross stress addition INR8.29b fresh addition to RL b)

slippage from RL: INR8b (largely due to one mid to large sized corporate) and c) Pipeline of INR18b. Long term average of relapse from RL stood at 15%

Fee income Excluding forex and derivatives fees, overall fees grew ~12%; Share of retail in

overall fees increased to 60% now vs 45-50% earlier; Retail fees are growing 20%+ YoY largely driven by retail liabilities fees; Corporate fees remain muted; Some pick up in transaction/commercial banking

Other highlights No of employees are down by 3,800 QoQ due to natural attrition and ICICIBC

has not replaced them. Bank feels there is scope for productivity from current levels

Standard assets provision of INR1b of which INR0.3b is for un-hedged forex exposure loans

Branches source ~30% of the secured retail loans for the bank Excess SLR at 5-6% as on September 30, 2014 Focusing on improving NBAP margin for ICICI Prulife to 12-13% vs 10.9%

currently Valuation and View Structural improvement in liability profile over the last few years has helped

ICICIBC to gradually improve NIMs to 3.4%, despite increasing competition within retail business. We expect gradual improvement in NIMs to continue as contribution of higher margin domestic business (led by retail business) increase over next few quarters. We factor NIMs improvement of ~20bp over FY14/17. Consequently NII CAGR is expected to be ~18% over FY14/17.

Fee income growth has been flat over FY08/13, and showed an improvement in FY14 (+12% YoY). While growth in FY15 is expected to be moderate, improvement in economic growth could lead to better corporate fees and improvement in retail business will aid overall fees. Consequently we factor fee income CAGR of 15% over FY14/17. Flexibility over opex will also provide cushion and core PPP CAGR is expected to be ~19% over FY14/17 (v/s 13% over FY09-14).

Despite challenges in economic environment bank contained net stress loans to 3.6% (2QFY15) as compared to 2.2% in FY11. Management remains confident of reducing stress additions in FY15 and have guided for credit cost of 0.9% (including INR2.2b of provisions for un-hedged forex exposure). PAT CAGR is expected to be lower at 19%+ over FY14-17. Helped by strong RoAs of 1.9% (core ROA of 1.6%+), core RoE is expected to remain healthy at 15-16% over FY14/17E.

ICICICBC is well placed for next growth cycle with Tier I of 12.8%+ and largest branch network in the private financials. Key catalyst (a) Improvement in growth environment and clear picture on interest rate and macro environment (b) Resolution of issues in key infra sectors (c) value unlocking in insurance business. Maintain Buy with SOTP based TP of INR1,900.

Maintain Buy with SOTP based TP of

INR1,900.

30 October 2014 5

ICICI Bank

Exhibit 2: We largely maintain our estimates

INR b Old Est. Revised Est. Chg (%)

FY15 FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17 Net Interest Income 186.6 223.1 270.3 190.0 220.8 271.4 1.8 -1.0 0.4 Other Income 119.3 139.1 165.0 117.9 138.2 164.7 -1.2 -0.7 -0.2 Total Income 305.9 362.2 435.3 307.9 359.0 436.1 0.6 -0.9 0.2 Operating Expenses 117.5 136.5 161.1 117.5 136.5 162.3 0.0 0.0 0.7 Operating Profits 188.5 225.6 274.2 190.4 222.4 273.8 1.0 -1.4 -0.1 Provisions 28.0 31.3 37.3 29.9 31.9 38.2 6.5 1.7 2.4 PBT 160.4 194.3 236.9 160.6 190.6 235.6 0.1 -1.9 -0.5 Tax 48.1 58.3 71.1 47.4 56.2 69.5 -1.6 -3.6 -2.2 PAT 112.3 136.0 165.8 113.2 134.3 166.1 0.8 -1.2 0.2 Margins (%) 3.3 3.4 3.5 3.3 3.4 3.5 Credit Cost (%) 0.7 0.7 0.6 0.8 0.7 0.6 RoA (%) 1.8 1.9 1.9 1.8 1.9 1.9 RoE (%) 15.4 16.2 17.1 15.3 15.7 16.8


Exhibit 3: ICICI Bank: SOTP FY16E

Key Ventures Stake (%)

Total Value INR b

Total Value USD b

Value Per

Share INR

% of Total Value Rationale

1,842 30.1 1,594 83.9 2.4x FY16E BV ex Invt in key ventures; Core ROA of 1.6% and Core ROE of 16%; Implied 16x core EPS

ICICI Pru Life Insurance 74 176 2.9 152 8.0 Apprisal Value ICICI Bank Canada 100 59 1.0 51 2.7 1x FY16E BV ICICI Bank UK 100 31 0.5 27 1.4 1x FY16E BV ICICI Home Finance 100 33 0.5 28 1.5 2x FY16E BV ICICI Pru AMC 51 34 0.6 29 1.5 Valued at 4% of AUM exp in FY16 ICICI Securities 100 47 0.8 41 2.2 15x FY16E PAT ICICI Lombard Gen. Ins 74 38 0.6 33 1.8 1x FY16 Networth ICICI Ventures 100 10 0.2 9 0.5 10% FY16E AUMs ICICI Sec. PD 100 12 0.2 11 0.6 1x FY16 Networth Total Value of Ventures 440 7.2 381 20.1 Less: 20% holding Discount 88 1.4 76 4 Value of Key Ventures 352 5.8 305 16.1

Target Price Post 20% Holding Co. Disc. 2,194 35.8 1,900 100 Current Value 1,860 30.4 1,610 Upside - % 18.0 18.0 18.0 Target Price w/o 20% Holding Co. Disc. 2,282 37.3 1,976 CMP (INR) 1,860 30.4 1,610 Upside - % 22.7 22.7 22.7


30 October 2014 6

ICICI Bank

Exhibit 4: DuPont Analysis: Core PPP to remain superior; loan growth a key for healthy earnings growth

Y/E March FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13E FY14 FY15E FY16E FY17E Net Interest Income 1.86 1.89 1.96 2.15 2.19 2.34 2.40 2.70 2.91 3.03 3.07 3.16 Core Fee Income 1.65 1.68 1.78 1.67 1.52 1.67 1.50 1.35 1.37 1.36 1.36 1.35

Fee to core Income 46.88 47.07 47.57 43.81 41.04 41.58 38.46 33.23 32.01 31.00 30.77 29.91 Core Income 3.51 3.57 3.74 3.82 3.71 4.01 3.90 4.05 4.28 4.38 4.43 4.51 Operating Expenses 2.39 2.24 2.19 1.81 1.58 1.72 1.75 1.76 1.82 1.87 1.90 1.89

Cost to Core Income 68.01 62.83 58.53 47.31 42.58 42.87 45.01 43.40 42.54 42.66 42.81 41.91 Employee cost 0.52 0.54 0.56 0.51 0.52 0.73 0.79 0.76 0.75 0.78 0.80 0.81

Employee to total exp (%) 21.64 24.16 25.49 27.99 32.86 42.57 44.78 43.20 40.94 41.68 42.31 42.72 Others 1.87 1.70 1.63 1.30 1.06 0.99 0.97 1.00 1.08 1.09 1.09 1.08 Core operating Profits 1.12 1.33 1.55 2.01 2.13 2.29 2.14 2.29 2.46 2.51 2.53 2.62 Trading and others 0.73 0.64 0.59 0.28 0.49 0.06 0.18 0.28 0.47 0.52 0.56 0.57 Operating Profits 1.86 1.97 2.14 2.29 2.62 2.35 2.32 2.57 2.93 3.03 3.09 3.19 Provisions 0.38 0.75 0.78 0.98 1.18 0.59 0.35 0.35 0.46 0.48 0.44 0.44

NPA 0.38 0.48 0.68 0.96 1.17 0.51 0.22 0.27 0.40 0.40 0.38 0.37 Others 0.00 0.27 0.10 0.01 0.01 0.08 0.13 0.08 0.07 0.08 0.07 0.07

PBT 1.48 1.22 1.36 1.31 1.44 1.76 1.97 2.22 2.47 2.56 2.65 2.74 Tax 0.27 0.18 0.24 0.35 0.36 0.42 0.52 0.60 0.73 0.75 0.78 0.81

Tax Rate 17.97 14.74 17.77 26.56 24.70 23.80 26.56 26.95 29.77 29.50 29.50 29.50 RoA 1.21 1.04 1.12 0.96 1.08 1.34 1.44 1.62 1.73 1.80 1.87 1.93 Less: Dividend from Subs 0.10 0.15 0.34 0.09 0.10 0.11 0.16 0.18 0.23 0.27 0.30 0.31 Core RoA (ex-income from subs) 1.12 0.89 0.78 0.88 0.98 1.23 1.28 1.45 1.51 1.53 1.57 1.62 Core Leverage 13.14 15.04 12.67 10.33 9.73 9.37 9.97 10.25 10.13 10.00 10.02 10.37 RoE 14.67 13.43 9.87 9.08 9.57 11.55 12.76 14.81 15.25 15.29 15.72 16.82


30 October 2014 7

ICICI Bank

Story in charts

Exhibit 5: NIM stable QoQ, Overseas NIM declines 5bp (%)

2.6 2.6 2.7 3.0 3.0 3.0 3.1 3.3 3.3 3.3 3.3 3.4 3.4 3.4

2.9

2.9

3.0 3.

3

3.3 3.4

3.5 3.

7

3.6

3.7

3.7

3.7

3.8

3.8

1.0 1.1 1.

4 1.5 1.6

1.2 1.3

1.3 1.

6 1.8

1.7

1.7

1.6

1.6

1 QFY

12

2QFY

12

3QFY

12

4QFY

12

1QFY

13

2QFY

13

3QFY

13

4QFY

13

1QFY

14

2QFY

14

3QFY

14

4QFY

14

1QFY

15

2QFY

15

Blended Domestic International


Exhibit 6: Avg. daily CASA ratio remains strong (%)

40.0

38.3

39.0

39.0

39.1

37.5

37.4 38.1

39.0 40

.3

39.1

39.1

39.5

39.5

1QFY

12

1HFY

12

9MFY

12

FY12

1QFY

13

1HFY

13

9MFY

13

FY13

1QFY

14

1HFY

14

9MFY

14

FY14

1QFY

15

1HFY

15


Exhibit 7: Fee income higher than expectation

15.8

17.0

17.0

17.3

16.5

17.1

17.7

17.8

17.9

19.9

20.0

19.7

19.4

21.0

1.5 1.6

1.5

1.5

1.3

1.3

1.4

1.3

1.3 1.

4

1.4

1.4

1.3 1.

4

1QFY

12

2QFY

12

3QFY

12

4QFY

12

1QFY

13

2QFY

13

3QFY

13

4QFY

13

1QFY

14

2QFY

14

3QFY

14

4QFY

14

1QFY

15

2QFY

15

Fee Inc. (INR b) % to Avg. Assets


Exhibit 8: Core operating profit to improve with loan growth

22 23 25 26 27 29 30 32 31 37 36 35 36 41

12.9

4.0 12

.5

6.4

25.2

23.6

20.5

21.4

15.0 30

.0

20.8

8.8 15

.4

9.6

1QFY

12

2QFY

12

3QFY

12

4QFY

12

1QFY

13

2QFY

13

3QFY

13

4QFY

13

1QFY

14

2QFY

14

3QFY

14

4QFY

14

1QFY

15

2QFY

15

Core Op. Profit (INR b) YoY Gr (%)


Exhibit 9: Domestic loan gr. at 15% YoY

2,20

7

2,34

0

2,46

2

2,53

7

2,68

4

2,75

1

2,86

8

2,90

2

3,01

4

3,17

8

3,32

6

3,38

7

3,47

1

3,61

8

20 20 19

17

22

18 16

14

12

16 16 17 15 14

1QFY

12

1HFY

12

9MFY

12

FY12

1QFY

13

1HFY

13

9MFY

13

FY13

1QFY

14

1HFY

14

9MFY

14

FY14

1QFY

15

1HFY

15

Loans (INR b) YoY Gr. (%)


Exhibit 10: Mix largely stable QoQ (%)

25 29 28 27 28 26 26 25 27 27 28 27 26 262 2 1 1 1 1 1 1 2 2 2 2 2 2

35 33 32 37 33 34 33 36 34 34 35 37 37 375 5 5

6 6 5 5 5 5 5 4 4 4 59 8 7

24 24 26 29 32 34 34 32 32 33 31 30 30 30

1QFY

12

1HFY

12

9MFY

12

FY12

1QFY

13

1HFY

13

9MFY

13

FY13

1QFY

14

1HFY

14

9MFY

14

FY14

1QFY

15

1HFY

15

International Unsecured Ret. Secured Ret.SME Agri Corp. & Othrs


30 October 2014 8

ICICI Bank

Story in charts

Exhibit 11: 1HFY15 credit cost in–line with guidance (%)

0.8

0.6 0.6

0.8 0.7 0.7

0.50.6

0.8 0.8 0.9 0.9 0.81.0

1QFY

12

2QFY

12

3QFY

12

4QFY

12

1QFY

13

2QFY

13

3QFY

13

4QFY

13

1QFY

14

2QFY

14

3QFY

14

4QFY

14

1QFY

15

2QFY

15


Exhibit 12: Abs. GNPA grew 6% QoQ, PCR declines marginally

4.4

4.1

3.8

3.6

3.5

3.5

3.3

3.2

3.2

3.1

3.1

3.0

3.1

3.1

1.0

0.9 0.

8

0.7

0.7

0.8

0.8

0.8

0.8

0.9

0.9

1.0

1.0

1.1

77 78 79 80 81 79 78 77 75 73 70 69 68 66

1QFY

12

1HFY

12

9MFY

12

FY12

1QFY

13

1HFY

13

9MFY

13

FY13

1QFY

14

1HFY

14

9MFY

14

FY14

1QFY

15

1HFY

15

GNPA (%) NNPA (%) PCR (%)


Exhibit 13: Addition of INR8.3b to RL; pipeline of INR18b

19.7

25.0

30.7

45.5

41.7

44.5

45.8

53.2

59.2

68.3 86

.0

105.

6

112.

7

110.

20.9 1.1

1.2 1.

8

1.6

1.6

1.6 1.8 2.

0

2.1 2.

6 3.1 3.2

3.0

1QFY

12

1HFY

12

9MFY

12

FY12

1QFY

13

1HFY

13

9MFY

13

FY13

1QFY

14

1HFY

14

9MFY

14

FY14

1QFY

15

1HFY

15

Restructured loans (INR b) % of loans


Exhibit 14: Consolidated profits (INR m)


Exhibit 15: DuPont Quarterly: Higher provisions and lower non-core income compensated by strong core income

1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 Net Interest Income 2.57 2.66 2.70 2.86 2.82 2.91 2.99 2.98 3.04 3.11 Fee income 1.33 1.35 1.36 1.33 1.32 1.43 1.40 1.35 1.31 1.40 Fee inc to Core income 34.03 33.64 33.61 31.82 31.94 33.03 31.94 31.18 30.12 31.07 Core Income 3.90 4.00 4.06 4.19 4.14 4.34 4.40 4.33 4.35 4.51 Operating Expenses 1.71 1.75 1.74 1.81 1.84 1.67 1.84 1.97 1.91 1.80 Cost to core Income 43.88 43.72 42.91 43.16 44.37 38.46 41.86 45.48 43.95 39.84

Employee 0.80 0.76 0.72 0.75 0.80 0.63 0.70 0.86 0.84 0.72 Others 0.92 0.99 1.02 1.06 1.03 1.04 1.14 1.11 1.07 1.07

Core Operating profits 2.19 2.25 2.32 2.38 2.30 2.67 2.56 2.36 2.44 2.72 Trading and others 0.19 0.26 0.34 0.33 0.51 0.12 0.57 0.69 0.62 0.42 Operating Profits 2.38 2.52 2.66 2.71 2.81 2.80 3.12 3.05 3.05 3.14 Provisions 0.38 0.40 0.28 0.35 0.44 0.45 0.49 0.49 0.49 0.57 PBT 2.00 2.12 2.38 2.36 2.37 2.35 2.63 2.56 2.56 2.57 Tax 0.54 0.57 0.64 0.63 0.70 0.66 0.85 0.74 0.77 0.76 RoA 1.46 1.54 1.73 1.73 1.68 1.69 1.78 1.82 1.80 1.81


30 October 2014 9

ICICI Bank

Exhibit 16: Quarterly Snapshot FY13 FY14 FY15 Variation (%) INR m 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q QoQ YoY Profit and Loss Interest Income 95,457 100,263 101,383 103,653 104,207 108,133 114,550 114,893 117,669 121,606 3 12 Loans 64,558 68,488 70,658 69,707 71,956 77,369 82,238 82,716 83,922 88,740 6 15 Investment 27,019 27,445 27,424 28,204 28,846 28,391 29,222 29,112 29,772 29,722 0 5 Others 3,879 4,330 3,301 5,742 3,404 2,373 3,090 3,065 3,975 3,143 -21 32 Interest Expenses 63,527 66,551 66,393 65,621 66,002 67,698 71,999 71,327 72,750 74,939 3 11 Net Interest Income 31,929 33,712 34,990 38,032 38,205 40,435 42,551 43,565 44,919 46,666 4 15 Other Income 18,799 20,430 22,146 22,082 24,843 21,665 28,010 29,761 28,498 27,384 -4 26 Trading profits -210 1,720 2,510 930 4,030 -790 4,470 2,450 3,880 1,370 -65 -273 Fee Income 16,470 17,090 17,710 17,750 17,930 19,940 19,970 19,740 19,360 21,030 9 5 Miscellaneous Income 2,539 1,620 1,926 3,402 2,883 2,515 3,570 7,571 5,258 4,984 -5 98 Total Income 50,729 54,142 57,136 60,114 63,048 62,100 70,561 73,326 73,417 74,050 1 19 Operating Expenses 21,235 22,209 22,612 24,073 24,906 23,221 26,170 28,791 28,250 26,971 -5 16 Employee 9,870 9,659 9,406 9,997 10,894 8,716 9,969 12,623 12,469 10,864 -13 25 Others 11,365 12,550 13,205 14,076 14,012 14,506 16,202 16,169 15,781 16,107 2 11 Operating Profits 29,493 31,933 34,525 36,041 38,142 38,879 44,390 44,535 45,167 47,079 4 21 Provisions 4,659 5,079 3,687 4,600 5,932 6,248 6,946 7,138 7,261 8,495 17 36 PBT 24,835 26,854 30,838 31,441 32,210 32,631 37,444 37,397 37,906 38,584 2 18 Taxes 6,684 7,293 8,335 8,400 9,468 9,110 12,122 10,877 11,353 11,394 0 25 PAT 18,151 19,561 22,502 23,041 22,742 23,521 25,322 26,520 26,553 27,190 2 16 Asset Quality GNPA 99,110 100,510 98,030 96,470 100,570 100,780 104,480 105,540 110,010 116,950 6 16 NNPA 19,410 21,380 21,850 22,340 24,720 27,070 31,210 33,010 34,740 39,970 15 48 GNPA (%) 3.1 3.1 2.9 2.7 2.8 2.7 2.7 2.6 2.7 2.7 5 2 NNPA (%) 0.6 0.7 0.6 0.6 0.7 0.7 0.8 0.8 0.9 1.0 9 23 PCR (Calculated, %) 80 79 78 77 75 73 70 69 68 66 -260 -732 GNPA - Retail 59,440 52,670 47,900 41,760 54,110 49,080 44,430 41,170 37,890 35,910 -5 -27 NNPA - Retail 6,820 5,990 5,930 5,240 7,760 7,620 7,800 8,170 8,460 8,900 5 17 Prov. for NPA in qtr 4,659 5,079 3,687 4,600 5,932 6,248 6,946 7,138 7,261 8,495 17 36 Credit Cost 0.7 0.7 0.5 0.6 0.8 0.8 0.9 0.9 0.8 1.0 11 15 Restructured loans 41,720 44,530 45,750 53,150 59,150 68,260 86,020 105,580 112,650 110,200 -2 61 % of Loans 1.6 1.6 1.6 1.8 2.0 2.1 2.6 3.1 3.2 3.0 -20 90 Ratios (%) Fees to Total Income 32.5 31.6 31.0 29.5 28.4 32.1 28.3 26.9 26.4 28.4 Cost to Core Income 41.7 42.4 41.4 40.7 42.2 36.9 39.6 40.6 40.6 37.1 Tax Rate 26.9 27.2 27.0 26.7 29.4 27.9 32.4 29.1 30.0 29.5 CASA 40.6 40.7 40.9 41.9 43.2 43.3 43.3 42.9 43.0 43.7 Dom. Loan/Deposit (Rep) 76.6 77.1 79.4 78.9 80.7 80.2 80.5 78.8 80.5 79.5 Loan / Deposit 100.2 97.7 100.1 99.2 103.5 102.8 104.9 102.0 103.4 102.8 RoA (cal) 1.5 1.5 1.7 1.7 1.7 1.7 1.8 1.8 1.8 1.8 RoE (Cal) 11.8 12.3 13.7 13.8 13.3 13.1 13.8 14.4 14.2 14.1 Margins - Cal (%) Yield on loans 9.9 10.1 10.1 9.7 9.7 10.0 10.1 9.9 9.8 10.0 23 2 Yield On Investments 6.9 7.0 6.8 6.7 6.7 6.6 6.9 6.7 6.9 6.9 6 30 Yield on Funds 8.8 9.0 8.7 8.7 8.6 8.7 9.0 8.7 8.8 8.8 6 9 Cost of funds 6.4 6.5 6.3 6.0 6.0 6.0 6.2 6.0 6.0 6.1 8 8 Margins 2.9 3.0 3.0 3.2 3.1 3.3 3.3 3.3 3.3 3.4 4 12 Margins - Reported 3.0 3.0 3.1 3.3 3.3 3.3 3.3 3.4 3.4 3.4 2 11 Franchise ATM 9,366 10,006 10,040 10,481 10,902 11,098 11,215 11,315 11,447 11,739 3 6 Branches 2,755 2,772 2,895 3,100 3,350 3,507 3,588 3,753 3,763 3,815 1 9


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ICICI Bank

Exhibit 17: Quarterly Snapshot continues FY13 FY14 FY15 Variation (%) INR b 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q QoQ YoY Balance Sheet Loans 2,684 2,751 2,868 2,902 3,014 3,178 3,326 3,387 3,471 3,618 4 14 Investments 1,735 1,792 1,862 1,938 1,879 1,837 1,854 1,967 1,921 2,018 5 10 Customer Assets 3,182 3,239 3,414 3,491 3,583 3,708 3,853 4,026 3,993 4,164 4 12 Deposits 2,678 2,814 2,864 2,926 2,912 3,090 3,170 3,319 3,358 3,521 5 14 Borrowings 1,369 1,350 1,468 1,450 1,556 1,450 1,506 1,544 1,456 1,500 3 3 Total Assets 5,041 5,112 5,273 5,368 5,486 5,635 5,741 5,946 5,884 6,111 4 8 Deposits Break Up CASA Deposits 1,087 1,144 1,171 1,226 1,258 1,339 1,372 1,424 1,444 1,537 6 15 % of total Deposits 41 41 41 42 43 43 43 43 43 44 Savings 779 806 815 857 889 935 957 991 1,027 1,056 3 13 % of total Deposits 29 29 28 29 31 30 30 30 31 30 Current 308 338 357 369 370 404 414 432 417 481 15 19 % of total Deposits 11 12 12 13 13 13 13 13 12 14 Term Deposits 1,591 1,670 1,693 1,700 1,654 1,751 1,798 1,895 1,914 1,983 4 13 % of total Deposits 59 59 59 58 57 57 57 57 57 56 Loan Break Up SME Loans 153 143 149 151 139 146 143 149 153 163 7 11 Corporate Loans 868 935 982 943 979 1,035 1,047 1,020 1,057 1,084 3 5 Retail Loans 912 963 999 1,074 1,085 1,151 1,222 1,320 1,372 1,441 5 25 of which Housing 471 512 541 576 596 631 666 706 742 793 7 26 Personal Loans 10 9 11 16 18 24 31 40 47 53 14 121 Credit Cards 26 26 28 27 30 31 32 33 36 36 1 16 Others 405 416 420 455 441 465 494 541 547 559 2 20 International Loans 752 710 737 734 811 845 915 898 888 930 5 10 Loan Mix SME Loans 5.7 5.2 5.2 5.2 4.6 4.6 4.3 4.4 4.4 4.5 Corporate Loans 32.3 34.0 34.2 32.5 32.5 32.6 31.5 30.1 30.5 30.0 Retails 34.0 35.0 34.9 37.0 36.0 36.2 36.7 39.0 39.5 39.8 International Loans 28.0 25.8 25.7 25.3 26.9 26.6 27.5 26.5 25.6 25.7 Subsidiaries PAT (INR m) I Sec 100 80 280 160 130 180 350 250 610 680 11 278 I Sec PD 330 270 230 390 1,200 -760 480 400 460 490 7 -164 I Venture 6 1 0 193 190 1 1 139 110 0 -100 -120 Pru AMC 280 230 280 310 370 440 470 550 610 620 2 41 ICICI Home Finance 490 534 534 642 576 604 517 534 500 481 -4 -20 ICIC Life Insurance 3,490 3,960 3,970 3,540 3,640 3,870 4,280 3,880 3,820 3,990 4 3 ICICI General Insurance 830 1,010 950 270 2,030 1,560 760 760 720 1,580 119 1 Consolidation adjustment -2,907 -1,746 -2,296 -3,626 -3,408 -2,435 -3,460 -5,793 -5,063 -4,381 -13 80 Subsidiaries PAT 2,619 4,339 3,948 1,879 4,728 3,460 3,398 720 1,767 3,460 96 0 ICICI Bank 18,151 19,561 22,502 23,041 22,742 23,521 25,322 26,520 26,553 27,190 2 16 Consol Profit 20,770 23,900 26,450 24,920 27,470 26,980 28,720 27,240 28,320 30,650 8 14


30 October 2014 11

ICICI Bank

Financials: Valuation Matrix61.2 Rating CMP Mcap Dividend

(INR) (USDb) FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 Yield (%) #ICICIBC* Buy 1,612 30.4 116.3 143.8 11.5 9.1 664 769 2.0 1.7 1.9 1.9 15.7 16.8 1.6HDFCB Buy 895 35.1 53.6 65.8 16.7 13.6 256 306 3.5 2.9 2.0 2.0 22.8 23.4 1.0AXSB Buy 430 16.5 36.7 43.3 11.7 9.9 220 256 2.0 1.7 1.8 1.7 17.9 18.1 1.1KMB* Neutra l 1,096 13.8 48.9 59.8 22.4 18.3 322 381 3.4 2.9 1.9 1.9 14.1 15.0 0.1YES Buy 663 4.5 58.9 75.8 11.2 8.7 328 388 2.0 1.7 1.7 1.7 19.4 21.2 1.2IIB Buy 709 6.1 43.3 54.4 16.4 13.0 228 273 3.1 2.6 1.9 1.9 20.5 21.7 0.7VYSB Neutra l 634 2.0 43.8 55.5 14.5 11.4 434 478 1.5 1.3 1.1 1.1 10.5 12.2 1.0FB Buy 139 1.9 12.9 15.4 10.8 9.1 99 111 1.4 1.3 1.2 1.1 13.6 14.6 1.6J&KBK Buy 138 1.1 25.2 28.4 5.5 4.9 152 174 0.9 0.8 1.3 1.3 17.6 17.4 2.9SIB Buy 27 0.6 4.3 5.3 6.4 5.1 30 34 0.9 0.8 0.9 0.9 15.0 16.5 2.6Private Aggregate 112.0 15.0 12.2 2.5 2.1SBIN (cons)* Buy 2,638 32.2 321.0 433.8 7.9 5.8 2,347 2,702 1.1 0.9 0.9 1.0 14.4 17.0 1.5PNB Buy 915 5.4 156.3 203.9 5.9 4.5 1,193 1,373 0.8 0.7 0.8 0.9 13.9 15.9 1.3BOI Neutra l 274 2.9 60.1 76.0 4.6 3.6 478 545 0.6 0.5 0.5 0.6 13.3 14.8 2.2BOB Neutra l 912 6.4 146.1 170.8 6.2 5.3 978 1,109 0.9 0.8 0.8 0.8 15.8 16.4 2.8CBK Buy 387 2.9 81.2 107.2 4.8 3.6 626 709 0.6 0.5 0.6 0.7 13.6 16.1 3.2UNBK Buy 224 2.3 40.2 48.7 5.6 4.6 330 370 0.7 0.6 0.6 0.7 12.8 13.9 2.4OBC Buy 272 1.3 54.8 71.4 5.0 3.8 502 556 0.5 0.5 0.7 0.7 11.4 13.5 3.2INBK Buy 166 1.3 28.1 32.0 5.9 5.2 288 312 0.6 0.5 0.6 0.6 10.1 10.7 2.8CRPBK Neutra l 337 0.9 61.9 74.2 5.4 4.5 687 745 0.5 0.5 0.4 0.4 9.3 10.4 2.4ANDB Neutra l 82 0.8 12.8 13.4 6.4 6.1 165 174 0.5 0.5 0.4 0.3 8.0 7.9 3.3IDBI Neutra l 68 1.8 14.4 19.7 4.7 3.5 157 173 0.4 0.4 0.6 0.7 9.5 11.9 2.3DBNK Neutra l 63 0.6 13.6 16.8 4.6 3.7 137 150 0.5 0.4 0.5 0.5 10.3 11.7 3.3Public Aggregate 59.8 7.5 5.8 0.9 0.8HDFC* Buy 1,062 27.1 38 46 17.5 12.9 166 192 4.1 3.1 2.5 2.5 23.8 24.8 1.5LICHF Buy 345 2.9 32 39 10.6 8.8 198 229 1.7 1.5 1.4 1.4 17.6 18.4 1.4DEWH Buy 364 0.8 62 76 5.9 4.8 359 416 1.0 0.9 1.3 1.3 18.4 19.7 2.8IHFL Buy 400 2.4 64 77 6.2 5.2 157 173 2.5 2.3 4.2 4.1 31.4 32.5 7.1IDFC Neutra l 149 3.7 14 16 10.9 9.5 109 121 1.1 1.0 2.5 2.5 12.5 13.0 1.9RECL Buy 294 4.7 65 77 4.5 3.8 298 357 1.0 0.8 3.4 3.4 23.9 23.6 3.8POWF Buy 277 6.0 59 69 4.7 4.0 295 346 0.9 0.8 3.2 3.1 21.5 21.6 3.8SHTF Buy 907 3.4 90 105 10.0 8.6 514 604 1.8 1.5 2.6 2.8 18.5 19.5 0.9MMFS Neutra l 291 2.7 20 24 14.3 12.1 117 134 2.5 2.2 2.9 2.9 18.5 19.1 1.4BAF Buy 2,787 2.3 208 245 13.4 11.4 1,123 1,328 2.5 2.1 2.9 2.8 20.1 20.0 1.2NBFC Aggregate 55.8 11.8 10.0 2.2 1.9*Multiples adj. for value of key ventures/Investments; For ICICI Bank and HDFC Ltd BV is adjusted for investments in subsidiaries

# Div Yield based on FY14 declared dividend; UR: Under Review

EPS (INR) P/E (x) BV (INR) RoA (%) RoE (%)P/BV (x)

EPS: MOSL forecast v/s consensus (INR) MOSL Consensus Variation Forecast Forecast (%)

FY15 98.0 96.9 1.2

FY16 116.3 114.4 1.7

Shareholding pattern (%)

Sep-14 Jun-14 Sep-13

Promoter 0.0 0.0 0.0

DII 22.3 23.2 25.0

FII 70.3 69.3 66.8

Others 7.5 7.6 8.2 Notes: FII includes depository receipts

Stock performance (1-year)

900

1,100

1,300

1,500

1,700

Oct-13 Jan-14 Apr-14 Jul-14 Oct-14

ICICI Bank Sensex - Rebased

30 October 2014 12

ICICI Bank

Financials and valuation

Income Statement (INR Million)Y/E March 2014 2015E 2016E 2017EInterest Income 441,782 496,699 560,947 672,855Interest Expended 277,026 306,730 340,150 401,486Net Interest Income 164,756 189,968 220,797 271,369 Change (%) 18.8 15.3 16.2 22.9Other Income 104,279 117,909 138,184 164,693Net Income 269,034 307,877 358,981 436,062 Change (%) 21.1 14.4 16.6 21.5Operating Exp. 103,089 117,452 136,538 162,270Operating Profits 165,946 190,425 222,443 273,792 Change (%) 25.7 14.8 16.8 23.1Provis ions & Cont. 26,264 29,871 31,879 38,181PBT 139,682 160,554 190,564 235,611Tax 41,577 47,363 56,216 69,505 Tax Rate (%) 29.8 29.5 29.5 29.5PAT 98,105 113,191 134,348 166,106 Change (%) 17.8 15.4 18.7 23.6Dividend (Including Tax) 28,336 34,382 40,808 50,455Core PPP* 155,776 179,755 209,773 259,122 Change (%) 22.6 15.4 16.7 23.5*Core PPP i s (NII+Fee income-Opex)

Balance Sheet (INR Million)Y/E March 2014 2015E 2016E 2017EShare Capital 15,050 15,050 15,050 15,050Equity Share Capita l 11,550 11,550 11,550 11,550Preference Capita l 3,500 3,500 3,500 3,500Reserves & Surplus 720,583 803,212 901,286 1,022,543Net Worth 735,633 818,262 916,336 1,037,593Of which Equity Net Wort 732,133 814,762 912,836 1,034,093Deposits 3,319,137 3,892,860 4,756,069 5,953,928Change (%) 13.4 17.3 22.2 25.2Of which CASA Deposits 1,423,784 1,624,887 1,827,047 2,053,531Change (%) 16.2 14.1 12.4 12.4Borrowings 1,544,091 1,550,129 1,706,403 1,940,689Other Liabi l i ties & Prov. 347,555 349,862 402,471 463,660Total Liabilities 5,946,416 6,611,114 7,781,279 9,395,871Current Assets 415,296 458,944 554,821 671,421Investments 1,770,218 1,814,474 1,995,921 2,295,309Change (%) 3.3 2.5 10.0 15.0Loans 3,387,026 3,963,580 4,807,117 5,949,057Change (%) 16.7 17.0 21.3 23.8Net Fixed Assets 46,781 47,022 47,262 47,502Other Assets 327,094 327,094 376,158 432,582Total Assets 5,946,416 6,611,114 7,781,279 9,395,871

Asset Quality (%)GNPA (INR m) 105,058 127,441 140,010 153,897NNPA (INR m) 32,980 45,298 48,862 51,636GNPA Ratio 3.0 3.2 2.9 2.5NNPA Ratio 1.0 1.1 1.0 0.9PCR (Excl Technica l wri te 68.6 64.5 65.1 66.4E: MOSL Estimates

RatiosY/E March 2014 2015E 2016E 2017ESpreads Analysis (%)Avg. Yield - Earning Assets 8.7 8.8 8.6 8.6Avg. Yield on loans 10.0 9.8 9.6 9.6Avg. Yield on Investments 6.6 6.7 6.4 6.4Avg. Cost-Int. Bear. Liab. 5.5 5.5 5.3 5.4Avg. Cost of Depos i ts 5.7 6.1 5.8 5.7Interest Spread 3.2 3.2 3.3 3.2Net Interest Margin 3.2 3.3 3.4 3.5

Profitability Ratios (%)RoE 14.4 15.1 16.0 17.5Adjusted RoE 15.3 15.3 15.7 16.8RoA 1.73 1.80 1.87 1.93Int. Expended/Int.Earned 62.7 61.8 60.6 59.7Other Inc./Net Income 38.8 38.3 38.5 37.8

Efficiency Ratios (%)Op. Exps ./Net Income* 39.8 39.5 39.4 38.5Empl . Cost/Op. Exps . 40.9 41.7 42.3 42.7Bus i . per Empl . (INR m) 86.8 90.9 102.4 119.2NP per Empl . (INR lac) 13.6 14.1 15.8 18.4* ex treasuryAsset-Liability Profile (%)Loan/Depos i t Ratio 102.0 101.8 101.1 99.9CASA Ratio % 42.9 41.7 38.4 34.5Invest./Depos i t Ratio 53.3 46.6 42.0 38.6G-Sec/Invest. Ratio 53.8 59.1 61.5 62.8CAR 17.7 17.4 16.2 14.9 Tier 1 12.8 12.8 12.2 11.5

ValuationBook Value (INR) 614.5 686.1 771.0 875.9 BV Growth (%) 8.5 11.6 12.4 13.6Price-BV (x) 2.6 2.3 2.1 1.8ABV (for Subs idaries ) (IN 507.9 579.4 664.3 769.3 ABV Growth (%) 10.5 14.1 14.7 15.8Price-ABV (x) 2.7 2.3 2.0 1.6ABV (for Subs Invst & NPA 487.9 551.9 634.7 738.0Adjusted Price-ABV (x) 2.8 2.4 2.1 1.7EPS (INR) 84.9 98.0 116.3 143.8EPS Growth (%) 17.7 15.4 18.7 23.6Price-Earnings (x) 19.0 16.4 13.8 11.2Adj. Price-Earnings (x) 16.4 13.7 11.2 8.8Dividend Per Share (INR) 23.0 26.5 31.4 38.8Dividend Yield (%) 1.4 1.6 2.0 2.4E: MOSL Estimates

30 October 2014 13

ICICI Bank

N O T E S

30 October 2014 14

ICICI Bank

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Disclosure of Interest Statement ICICI BANK LTD Analyst ownership of the stock No

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2QFY15 Results Update | Sector: ICICI...

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